Swapnil Rege and his firm, SwapStar Capital LLC, have been slapped with permanent trading bans and a hefty financial penalty following a fraud investigation by the Commodity Futures Trading Commission (CFTC). A final judgment and consent order was entered by Judge Zahid N. Quraishi of the U.S. District Court for the District of New Jersey on September 2, 2022, resolving charges of fraudulent solicitation and misappropriation.
The CFTC alleged that Rege and SwapStar Capital fraudulently solicited funds from individuals with promises of high returns – in some cases up to 60% – and immediate or short-notice redemption. However, the agency found the defendants misused the funds, trading commodity interests through accounts they controlled, including those held under the name of Rege’s spouse, Reema Rege, who is designated as a relief defendant. A portion of the solicited funds were also allegedly used for personal expenses and to operate a Ponzi scheme, paying earlier investors with money from new investors.
Adding to the severity of the charges, the CFTC discovered Rege had previously been barred from trading commodity interests under a prior consent order. He allegedly violated this order by continuing to trade despite the prohibition.
The court order requires Rege, SwapStar Capital LLC, and Reema Rege to collectively pay $4,894,225 in disgorgement and $161,335 in pre-judgment interest. Reema Rege’s disgorgement obligation is limited to the balances in specified accounts. Additionally, a $200,000 civil monetary penalty was imposed, and a permanent injunction prevents further violations of the Commodity Exchange Act (CEA) and CFTC regulations. The case stems from a complaint originally filed by the CFTC on October 26, 2021.
“This Order reflects the CFTC’s continued commitment to ensuring that wrongdoers are held fully accountable for their misconduct, including for violating a prior consent order,” stated CFTC Acting Director of Enforcement Gretchen Lowe. The CFTC coordinated with the Securities and Exchange Commission (SEC) on this case, as the SEC also pursued and obtained final judgments against Rege and SwapStar Capital LLC.
The CFTC warns that victims may not fully recover their lost funds, as wrongdoers often lack sufficient assets to cover restitution.
Source: CFTC.gov
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